This is interesting… but not simply because of the surface visibility. Yesterday there was an event in Charlotte, North Carolina, that brought together Apple CEO Tim Cook, Commerce Secretary Wilbur Ross, U.S. Workforce policy advocate Ivanka Trump and U.S. CoC President Tom Donohue (on the margin).
Today, Apple Inc announces a restructuring of their supply chain away from China. In the media report notice the nations that likely stand to gain, and reference Trump’s 2017 golden ticket tour of Asia.
(Reuters) – Apple Inc has asked its major suppliers to assess the cost implications of moving 15%-30% of their production capacity from China to Southeast Asia as it prepares for a restructuring of its supply chain, according to a Nikkei Asian Review report on Wednesday.
Apple’s request was a result of the extended Sino-U.S. trade dispute, but a trade resolution will not lead to a change in the company’s decision, Nikkei said s.nikkei.com/31zCGhw, citing multiple sources.
The iPhone maker has decided the risks of depending heavily on manufacturing in China are too great and even rising, it said.
Earlier this month, credit rating agency Fitch said it views Apple, Dell Technologies Inc and HP Inc as potential blacklist candidates if China blacklists U.S. companies in retaliation for restrictions on Huawei.
The countries being considered include Mexico, India, Vietnam, Indonesia and Malaysia. India and Vietnam are among the favorites for smartphones, Nikkei said, citing sources who did not want to be identified as the discussions are private.
Last week, Foxconn said it had enough capacity outside China to meet Apple’s demand in the American market if the company needed to adjust its production lines, as U.S. President Donald Trump threatened to slap further $300 billion tariffs on Chinese goods. (read more)
In November of 2017, President Trump traveled to a specific set of Asian nations to meet with their leaders in advance of the APEC summit. Included in the individual bilateral discussions (disconnected from APEC) was: Moon Jae-in (S Korea), Shinzo Abe (Japan), Tran Dai Quang (Vietnam), Rodriquo Duterte (Phillipines) and Narenda Modi (India).
Notice the flow… Shinzo Abe, then Moon Jae-In, then meeting with Xi Jinping.
Who are the principals in the DPRK hostage release of Kim Jong Un? Abe, Moon and Xi.
It’s clear that for two-and-a-half years U.S. President Trump has been working on two connected objectives: (1) removing the threat posed by North Korea by severing the ability of Beijing to use the proxy province as a weapon (Kim is hostage to China); and (2) deconstructing the growing economic influence of China.
The second phase of the 2017 tour took place after Trump visited China. Additionally, there was a simultaneous shift in language. President Trump began using the term “Indo-Pacific”. The tour continued with extended bilateral trade discussions with Vietnam (Tran Dai Quang), India (Modi), and Philippines (Duterte).
In hindsight the connection and strategy is clear. Prime Minister Shinzo Abe is the fulcrum for the two objectives: (1) North Korea (denuke via hostage release); and (2) China (global trade rebalance).
There are ASEAN regional economic beneficiaries for #2, breaking the Chinese supply chain and targeting a manufacturing retreat. Namely: Japan, Vietnam, India, South Korea, Philippines, Malaysia, Indonesia… and Mexico (think USMCA).
[Additionally, Singapore and Tokyo pick up the financial benefits from worries over Hong Kong. More pressure on Chairman Xi]
Back to yesterday… Tim Cook, Wilbur Ross and Ivanka Trump:
Flashback to June 2018: